Question

Sheridan Auto Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $26,400. All sales are subject to a 10% sales tax. Compute sales taxes payable, and make the entry to record sales taxes payable and sales revenue.

Answer 1

Step-by-step explanation:

Sales revenue x (100%+sales tax rate) = sales revenue with tax

sales revenue x 1.10 (100%+10%) = 26400

sales revenue = 26400/1.10

sales revenue = 24000

Sales revenue with tax - sales revenue = sales tax

26,400 - 24,000 = 2,400

journal entry

cash. 26,400

Sales revenue. 24000

Sales tax. 2400

Answer 2

Answer and Explanation:

Compute sales taxes payable:

cash $26,400 -

sales revenue - $23,760

sales tax payable - $2,640

make the entry to record sales taxes payable and sales revenue:

sales tax payable $2,640 -

cash - $2,640